Thursday, December 27, 2012

Love Africa but Invest in it with your Brain



When considering Africa, people do not generally think of sky scrapers, city dealers, affluent middle classes, bankers in suits, screens of numbers and the trading of stocks and shares. This is, however, increasingly an African image we will have to get used to.

I recently watched a webinar of  the London Stock Exchange where investors were buzzing with enthusiasm for the growth in African shares. 

I got an impression that it was a bit of a gold rush, but I am always wary of the ‘next big thing’.  The story is, however, quite compelling: double digit annual growth in a number of counties;  over 10 percent of the shares on the Alternative Investment Market in London (AIM) are either primarily or totally involved in Africa; 

The African Securities Exchanges Association (ASEA) is currently represented by 20 exchanges in 27 African countries and the market is expanding rapidly.  In short, it is a great time to invest in Africa.

The 3 year performance of the FTSE Pan Africa Index compares very favourably with comparable indexes.
Some questions immediately spring to mind:  

How do you measure the market?  Where do you start?  What are the big opportunities?  Which counties?  Which Companies?  The choice is bewildering for most, even before you worry about how to spread your risk or consider currency fluctuations.  But there is help…

We have all heard of the FTSE 100 Index or the Dow Jones Industrial Average. We now have a new initiative from FTSE Group: the FTSE ASEA Pan Africa Index Series (launched 3 weeks back). Those wishing to invest, track the market place, or compare funds, now have a suitable benchmark index.  

This will help investors have the confidence to invest in funds and see how much they outperform, or underperform the index.

The Index excludes South Africa – a massive and much more mature market that would dwarf the output of other countries in it – instead focusing on Botswana, Cameroon, Cape Verde, Egypt, Ghana, Ivory Coast, Kenya, Libya, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, Kenya, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe. 

The index contains no more than 30 constituents per country and will have a maximum country weight of 20 percent.

I am now waiting for someone to launch a FTSE ASEA Pan Africa Index tracker fund which will allow investors to place money across the continent without paying large fees to asset managers.  Jonathan Cooper, Managing Director, Middle East & Africa, FTSE Group, said: “Investors are increasingly focused on frontier and emerging markets as a source of return and portfolio diversification.”


The lesson here is to love Africa with your heart, but invest in it with your brain.  The FTSE ASEA Pan Africa index has an impressive Year to Date (YTD) performance of almost 19 percent, compared with a YTD performance of under 5 percent for the FTSE BRIC 50 Index.  A thought worth pondering.

Sunday, December 23, 2012

Christmas And The Milked Africa ..



Christmas is very important in the world’s calendar. It is the month our savior and Lord Jesus Christ was born. We have every reason to be joyful, thankful and delighted. 

Because of Christ, we are saved and free. The celebration of the birth of Christ is a poignant reminder of why he came to this world and the example he has set for us all to follow.

His ministry was focused on helping the poor, needy, sick and downtrodden. As we celebrate Christmas, the world must remember the poor and afflicted and those that are incapable of helping themselves. This is a moment we should reach out and be generous with what God has blessed us with.


Africa is still suffering from abject poverty, malnutrition, famine and disease. It will be a crime against humanity if the west continues to witness the impoverishment of a continent that has done so much to contribute to its wealth and prosperity.

Africa’s resources have played a vital part in the development of the western world and the west is duty bound to give back. Africa has the potential to continue to help build the infrastructures of the world, but it needs help in harnessing its raw material in a way that will benefit its people.

The agenda should not be business as usual, where only the interest of the west is at the center of any investment engagement, but how the peoples of Africa can benefit long-term from its untapped mineral and natural wealth.

Milking Africa’s wealth to service the west’s industry without any consideration for the plight the people in this rich continent  face each day, is sinful and against the teachings of Christ. And the west should be mindful of the long-lasting consequence this might have on its own people.

Taking from a continent and not giving back sufficiently can only continue to foster serious migration issues across the borders of Europe and America. Africans will continue to come in numbers to seek the wealth that has been taken from them and their fore-fathers.

Helping to develop and enrich Africa’s vital economic institutions are the only way forward in empowering its people and achieving self-sufficiency. As African countries continue to discover oil on their shores and mineral wealth on their land, the future can only be bright, as suffering is what most of them have come to know as a way of life.

It seems finally, the Almighty God has smiled on a people after witnessing how their resources have been ravaged with savage intent by the world’s industry with little or no compassion for its inhabitants. 

Prudent and vibrant leadership is slowly taking control of Africa’s governance, and it seems it won’t be long before Africa starts redefining its own economic agenda as it carves for itself a more dominant and fulfilling role in world economic affairs.

By the way, I wanted to wish a Merry Christmas to all of you, and saying a big THANK YOU for your support and readership!

Thursday, December 20, 2012

Compensating Africa for Colonialism.. Legal Perspective



The question of compensation to African countries for being victims of colonization which occurred between the 18th and 19th century was raised once again by some African leaders during the 64th Session of the United Nations General Assembly which was held in September 2009 in New York. 

This path was championed by former Libyan Leader, Muammar al-Qadafi (RIP) who in an address on that occasion called on the colonial powers to pay not less than 77 Trillion US Dollars to Africa in compensation for the ‘evil' effects of colonial system in Africa. This is not the first time such a question has been raised by the Libyan Leader at an international forum. 

It was first raised when the German government, about a decade ago, decided to pay compensation to Jewish families who were victims of Nazi activities during the Second World War. And it continues as a matter of concern to many independent African states seeking  support and international consensus.

The matter has raised several questions with different dimensions including, whether compensation to Africa is necessary and feasible vis-a-vis the benefits derived from that system? What is the basis of determination of the quantum and mode of distribution of the compensation among the independent African states?

Do the colonial powers have the political will and resources as individual entities to pay compensation to Africa even if it is legitimate? These are important questions demanding answers but these are not the focus of the present article. The author only discussed them briefly setting the stage for an in-depth research and analysis.

The purpose of this article is to contribute to the ongoing debate and discussions on the matter from a legal perspective but in a balanced and open-minded manner with the aim to enlighten readers on the matter. The focus is on whether we can qualify colonization as a "wrongful conduct" for which responsibility or liability is attributable to the colonizers? And on what legal ground is payment of compensation sustainable under modern international law (precisely, after 1945)?

Before I turn to the legal issues involved, a brief descriptive analysis of the colonial policy in Africa would be helpful here to understand the trend, reality and effectiveness of that system.

II Colonial Policy in Africa

In the latter half of the 19th Century Africa become the object of widespread colonial expansion. During the 1850s Great Britain began its military campaign to conquer the Gold Coast, and the states of Ashanti and Fanti were subdued. In 1874 the British colony of the Gold Coast was formed. Ostensibly seeking to halt the slave trade, British forces occupied Lagos, which in 1874 was placed under the control of the Governor-General of the Gold Coast.

When the Suez Canal opened in 1869 – now the shortest sea route to India and the Far East was through the Mediterranean – the British sought to gain control of the waterway. With its possessions of Gibraltar and Aden, Great Britain controlled the exits to the Mediterranean and Red Sea. The Suez Canal, however, was commercially operated by a French company. Adjacent to Egyptian territory, the Canal was controlled by the Egyptian Government and the Turkish Kheidive (the latter had only nominal control).

In its efforts to obtain its goal, the first thing Britain did was to establish economic control over the Canal. Taking advantage of the economic difficulties of Egypt, in 1875 the British Government bought Egypt's shares in the Suez Canal Company, thus becoming the largest single shareholder. In 1882, under the pretext of quelling an uprising in Alexandria, British forces occupied Egypt.

British colonizers systematically robbed the African colonies, transferring their entire economy to the service of British industry. They directed the colonial states to rely exclusively on the export of agricultural goods like cotton from Egypt, Cocoa from the Gold Coast and Ivoire Coast, thus providing the industry of Great Britain with cheap and high quality cotton fibre and cocoa products. 

In 1875 Egypt was an exporter of grain, but by 1908 it was forced to import it. High tariffs were set for imported industrial raw materials and machinery for local production, and this led to a decline in the African industries. Existing records of this trend of economic relationship bear adequate testimony to these facts.

British expansion in Africa was a government policy and was also conducted by private capitalists like Cecil Rhodes. The British South African Company, owned by Rhodes, was given rights and powers of government in the area later called Rhodesia. Earlier, in 1886, the same rights were acquired by the United Africa Company, which began to trade in the region of the Niger Delta. In South Africa, British capitalists were eager to establish po9litical control over the gold fields of Transvaal, which were already in their power economically.

The Boer Government was not doing everything it could to make the mines as profitable as possible. As a pretext for was, the British raised the question of the status of foreigners, primarily British, who arrived in Transvaal after the gold deposits were discovered, the Boer Government denied the foreigners complete political rights, fearing that the newcomers would eventually usurp the Boers. British propaganda tried to convince public opinion that the government was fighting for the political interests of the English in Transvaal, not the mercenary interests of Cecil Rhodes and the Rothschilds.

In the 1850s Frances began to seize African territory in Senegal. In 1857 the French took Dakar and began a war to conquer the state of Kaior. The first victim of French capitalism in North Africa was Tunisia, which was of considerable geographical importance with respect to the Mediterranean. Since the 1860s Tunis had been in financial bondage to the British and French capitalists.

Taking advantage of a skirmish with nomadic Arabian tribes on the Tunisia-Algeria border in 1880, a French expeditionary force was sent in to "help" and occupied the most important centres of Tunisia. The French forced the local ruler to allow their forces to remain in Tunisia and local determine foreign policy. Later Tunisia was formally declared a protectorate of France. Already by the 1870s French colonialists began to penetrate into Morocco, gradually bringing individual tribes under their influence and utilizing feudal institutions to acquire land and privileges.

Belgium also participated in the division of African territory. In 1876 the King of Belgium, Leopold II, created the so-called International Association for the Exploration and Civilization of Central Africa. The real goal of the Association; however, was to seize and exploit the Congo River Bain. By 1884 most of the Basin area had come under Belgian control. But the mouth of the Congo River, with the diplomatic help of the British, was ruled by the Portuguese.

In the 1880s Germany initiated its own colonial policy. In 1883 the country founded a settlement in thee Angra Pequena region in south-western Africa. Later the territory was made a German protectorate.

Taking advantage of the fighting between the leading European powers to gain control over the last free possessions, in 1884 Germany seized Cameroon. In this way German Southwest Africa was formed. In 1885 the country took vast territories in the East Africa and laid the foundations for another colony – German East Africa.

In the 1880s Italy, with British backing, began to colonize Eritrea and Somalia.

In order to prevent the French from access to the Nile Valley, in March 1891 Britain reached an agreement with the Italian government to delineate spheres of influence in East Africa. Britain recognized Ethiopia to be in Italy's sphere of influence and stipulated that the western boundary of the Italian sphere be drawn at a sufficient distance to the East from the headwaters of the Nile. 

To cut off access to the Nile Valley from the west, Britain concluded an agreement with Germany. In accordance with the Anglo-German Treaty of 1893, the territory of Cameroon up to Lake Chad in the north and the Shari River basin was declared to be in the sphere of German influence.

The final clash between the British and French in their quest to gain control of the Upper Nile occurred in 1898 when French expeditionary forces marched out of Central Africa to the Nile. In early September of that same year, the British crushed Arab forces and seized the capital of the Sudan – Khartoum. Under pressure from England, French forces retreated from the Upper Nile region. 

In March 1899 the two countries reached an agreement concerning mutual spheres of influence in Africa. The boundary between French and \British possessions in Africa was primarily drawn along the watershed between the Lake Chad and Congo River basins on one side, and the Nile River basin on the other. France acquired part of the Sudan, which made it possible for the country to unite its territory in North and West Africa with its possessions in the central regions of the continent.

By the late 19th – early 20th centuries, all of Africa had been divided among the imperialist powers, with Great Britain acquiring the lion's share (as many as 37 million people inhabited British territory in Africa). In West Africa Great Britain seized Nigeria, the Gold Coast, Zambia and Sierra-Leone; in East Africa, the country controlled Kenya, Uganda, Zanzibar and Somalia. Almost all of South Africa was a part of the British Empire. Though formally a part of the Ottoman Empire, Sudan and Egypt were in effect British colonies.

France had the second largest colonial empire in Africa: West Africa, Equatorial Africa, Madagascar and a part of Somalia. Up to 17 million people lived on these French possessions.

Germany took Cameroon, Togo, Southwest Africa, and East Africa (including the territory of Tanganyika), with an overall population of approximately 10 million people. Belgium, Spain, Italy and Portugal also owned colonies in Africa.

The only independent state in Africa was Ethiopia, which defended its independence in an armed struggle with Italy. In late 1895 Italian forces began their advance into Ethiopia from Eritrea. Within a few months the Italian expedition forces were defeated in a battle at Adua. In October 1896 Italy was forced to conclude a peace agreement under which Ethiopian independence was recognized.

An all-African organization emerged during the fierce struggle against opponents to the unification of the African peoples. The 1958 meeting of eight independent African states in Accra, the capital of Ghana, marked the beginning of the formation of this organization. 

At the first inter-African conference held in Addis Ababa in May 1963, the Organization of African Unity (OAU) was formed the largest regional organization among the developing countries, OAU states its firm resolution to liberate the entire African continent from foreign rule and to eliminate colonialism and neo-colonialism in all its forms and manifestations.

The second phase of the national liberation struggle, which began when the African countries started to acquire their independence, was more complicated and bloody: the young states underestimated the power of neo-colonialism.

Socio-economic problems proved to be entirely difficult to overcome, and, in addition to the colonial legacy, it was necessary to remove the obstacles hat had hindered the development of African society since the pre-colonial period. Ethnic strife and tribalism complicated the situation even more in some states.

III The Aftermath of the colonial past

After the African states won their independence, ruling circles in the former mother-countries were reluctant to give up their positions. Thus, efforts were made to transfer power to political forces considered to be reliable. The colonial powers tried to impose state and legal institutions typical of bourgeois political and economic principles in the newly free countries, to entangle them in unequal treaties and to draw them into military blocs. The imperialist countries endeavoured to preserve the economic backwardness and feudal and tribal order in the liberated countries.

After winning political independence, it was important for the new state to attain economic independence. The colonial legacy had a ruinous effect on the economic situation in the African countries. Single corps and a one-sided and antiquated agricultural system made the new states dependent on the world capitalist economy. Progressive forces in the young states fought for full national revival, for radical economic and social reforms, and for genuine political independence from the imperialist countries.


Typing groups of countries emerged in Asia and Africa in the 1950s and 1960s: states undergoing radical socio-economic changes and following a policy of socialist orientation; states developing along the path of capitalism; and states remaining the possessions of capitalist states. Each of these general groups possesses a broad spectrum of political and economic situations.

As the countries of Africa became more politically independent, they began to seek regional solidarity and to protest the imperialist countries' policy of neo-colonialism. The new states were faced with the urgent task of overcoming the backwardness inherited from the period of colonial rule. Their need to develop  mutually beneficial types of economic cooperation demanded that they unite. 

Economic alliances made it possible for the developing countries to construct modern industrial projects. Alone, the majority of these countries had neither the financial base nor the corresponding market for optimal-size enterprises. By taking advantage of the international division of labour on a regional basis to achieve economic cooperation and integration the developing states were able to accelerate their economic growth.

IV  Evaluation of colonization in Africa

From the foregoing descriptive analysis, it is evidently clear that colonization of Africa was an organized and effective system lasting for a whole century in the interest of trade and commerce which was promoted in England, the Netherlands, Germany, Belgium and France by ruthless profit-making companies. 

It may be argued that Colonization of  Africa by the Europeans opened  the continent to western civilization, formal education, western democracy and   may further support this realities with the fact that countries in Africa such as Ethiopia which were not effectively colonized are worst today than those colonized in terms of development, peace and security. However, such arguments must be weighed against the problems of eliminating the aftermath of the colonial past which is very costly for Africa. The disadvantages weigh higher than the advantages.

The independent African States are paying high prices in terms of civil conflict (resulting from the arbitrary nature of the boundaries by colonial powers in Africa), problems of governance (resulting from the transfer of political power from colonial masters to favourite elites though power was taken from traditional rulers through conquest or treaties), backwardness (resulting from under-development, exploitation of human and natural resources), distortion of the African cultural development (resulting from the influence of European culture and religion), lost of respect and identity (resulting from master-servant relationship and subjugation of Africans), to mention but a few. It appears justifiable on those grounds to say that colonization has done more harm than good to Africa.  

V  Some legal implications of colonization

The decolonization process was basically completed by the 1960s after the landmark of the adoption by the UN General Assembly in 1960 of the "Declaration on the Granting of Independence to Colonial Countries and Peoples", (GA Res. 1514 XV of 14). The resolution declares among other things that: 

"The subjection of people to alien subjugation, domination and exploitation constitutes a denial of fundamental human rights,  is contrary to the Charter of the United Nations and is an impediment to the promotion of world peace and cooperation". From this day, colonization, whether direct or indirect, has been qualified as a "wrongful act" and prohibited by international law just as was done with slavery which was originally coalesced in the Vienna Declaration on the Abolition of the Slave Trade in 1915, one of the flagrant abuses of human rights. Such an act would lead to state responsibility. But the question is whether the 1960 Declaration has a retrospective effect for the colonial powers?

The law of state responsibility is concerned with the determination of whether there is a wrongful act for which the wrongdoing state is to be held responsible or liable and what the legal consequences are (e.g. an obligation on the part of the wrongdoing state to restore the previous situation or pay compensation), and how such international responsibility may be implemented (e.g. through countermeasures adopted by the victim states such as reprisal or restoration.

In the Spanish Zones of Morocco Claim (1925) 2 RIAA 615, Umpire Huber expressed the concept of state responsibility in the following terms:

"Responsibility is the necessary corollary of a right. All rights of an international character involve international responsibility. If the obligation is not met, responsibility entails the duty to make reparations.'

We can refer to the work of the International Law Commission Draft Articles on State Responsibility (Yearbook of the ILC, 1979), which represents an authoritative statement of the principles regulating state responsibility, in particular in relation to the content, forms and degrees of state responsibility. This can be supplemented by a considerable amount of case law on the subject generated within the last century. Article 19(2) of the Draft Articles states that:

Article 19(2) of the Draft Articles defines an international crime as:

"An internationally wrongful act which results from the breach by a state of an international obligation so essential for the protection of fundamental interests of the international community that its breach is recognized as a crime by that community as a whole ..."

Four practices are expressly identified as international crimes, although these are merely illustrative and not exhaustive. These are:

i)       A serious breach of the international rules created for the preservation of international peace and security, such as the rules prohibiting aggression;

ii)      A serious infringement of the principles which safeguard the right of self-determination of peoples, such as the rule prohibiting the establishment or maintenance by force of colonial domination;

iii)     A serious breach on a widespread scale of an international obligation of essential importance for safeguarding human beings, such as those prohibiting slavery, genocide and apartheid; and

iv)     A serious breach of an international obligation of essential importance for the safeguarding and preservation of the human environment, such as those prohibiting mass pollution of the atmosphere or of the seas.

In application of the above article, the colonial powers were directly and effectively engaged in colonizing Africa for over hundred years and the ‘good' and ‘bad' of that system can be imputed to the colonial powers.

The actions of state organs, agencies and representatives must he attributed to the state for the purposes of determining international responsibility. Direct or indirect responsibility will devolve to the states for:

i)       Acts of the executive, legislative and judicial branches of the government. (as in Draft Article 6).

ii)      Any actions of the political sub-division of the state, such as individual federal states or provinces (as in Draft Article 5).

iii)     An action of any organ, state employee or other agent of the government

functioning within their official capacity (as in Draft Article 8).

Acts which are lawful under municipal law, but unlawful under international law attract international responsibility and it is no defense to an international delict that colonization was legitimate under municipal law of the colonial powers. As the Court pointed out in the Polish Upper Silesia Case (1926) PCI) Reports, Series A, NO.7:

‘…municipal laws are merely facts which express the will of and constitute the activities of states in the same manner as do legal decisions or administrative measures.'

Imputability for actions of agents and employees of those states engaged in colonization extends in particular to the police and the armed forces. In this respect, the following principles are important:

          A state is liable for the official actions of all agents no matter how minor in rank (Draft Article 6). See, Massey Case (1927) 4 RIAA 15.

However, it would be difficult to determine whether the wrongdoing by the colonial powers constitute a breach of an international obligation of those powers. This is because the resolution itself was adopted by 89 votes to 0, with nine abstentions. The abstaining states include Belgium, France, Portugal, Spain, the UK and US (virtually all the states engaged in colonialism abstained).

The colonial powers did not give consent to be bound by the resolution and it may apply only between parties to the agreement.  As a general principle, a treaty does not establish rights or duties for third states without their consent (Article 34 of the Vienna Convention on the Law of Treaties, 1969). This rule is expressed in the maxim pacta tertiis nec nocent nec prosunt, and is supported by a number of international decisions. See especially, the Free Zones of Upper Savoy and the District of Gex Case (1932) PCIJ Reports, Series A/B, No. 46.

 A number of exceptions to this rule have been established both under the Convention and also in customary law. Cumulatively, these include the following:

(i)                Multilateral treaties declaratory of customary law will apply to non-parties, although in fact they are not bound by the treaty itself, but rather the underlying customary principles. See the North Sea Continental Shelf Cases (1969) ICJ Reports, p.3.

(ii)             Multilateral treaties which are instrumental in the creation of new customary rules may ultimately bind third parties on a customary basis, for example, the Hague Convention on the Rules of Land Warfare 1907.

(iii)           Emergence of a jus cogens: Article 64 of the Convention stipulate that, where a new peremptory norm of general international law has emerged, any existing conflicting conventional obligations are terminated.

Conclusion

Based on the expose' and critical analysis, it may be argued that imputability of the wrongful act of colonization to colonial powers will pass the test for responsibility whether they give consent or not to international agreements that criminalize and prohibit colonization. But the question that remains difficult to answer is whether those wrongful acts (colonization) can also pass the test of time (have retrospective effect)? This seems impossible in the present case.

It is important to note that the request for compensation for colonizing Africa, even if on any justifiable ground as shown in this paper, will require not just international law but most importantly the political will of the colonizers, united effort of the independent African States and support from the entire international community. 

This dream is not easily achievable (not in the shortest time) as envisaged by some African leaders because of the complexity of the issues. Africa was not the only victim of colonization and in the history of mankind people have been colonized by one another formally and non-formally. More so, where African States have also benefited in one way or the other through the relationship.

Alternatively, the African states must be able to strategically attract the colonizers to become more committed in their assistance to them for a speedy development on the continent. 

During the visit of the US President Barack Obama to Ghana in 2009 he made it clear that the destiny of Africa lies in the hands of Africans themselves. African states need to develop mutually beneficial types of economic cooperation which also demand that they unite.

Economic alliances within and outside Africa would possible lead African countries to construct modern industrial projects instead of wasting their energy in fighting for compensation for colonization. 

Suspended Aid to Rwanda; The Implications


The decision of some donors to suspend aid to Rwanda raises a fundamental question on the rationale for rich countries to give aid to poor countries. Is the major reason for aid to reduce poverty and help raise the welfare of the poor in developing countries or is to increase the ability of rich countries to exercise political leverage over them?
The decision on Rwanda will confirm the rarely discussed, but widely held view that the raison d'être for aid is mainly for political leverage. It increases control and potential for arm stringing of the poor by the rich.

Rwanda is consistently rated as a country that uses aid wisely, productively and to the best benefit of its people. The 2010 United Kingdom Department for International Development Department (DFID) evaluation of the impact of UK aid globally, ranked Rwanda highest in delivering best value for every pound of aid given to the country.

Over the last five years alone, with effective use of aid and domestic resources, Rwanda helped over one million of its citizens raise themselves out of poverty. According to the results of the 2011 externally validated household living conditions survey, the poverty headcount reduced by an unprecedented 12 percentage points, with poverty reducing faster in rural areas than urban areas and inequality declining as measured by the geni-coefficient.
This achievement was termed by the highly respected Oxford University Economist, Paul Collier, as a development hat trick - high economic growth resulting in significant reduction of rural and urban poverty, with inequality falling. This means the benefits of a decade of growth are fairly and equally distributed across the country.
Rwanda is one of few sub-Saharan African countries on track to achieve almost all the millennium development goals by 2015.
The country has been able to put all children of school going age in school and they are guaranteed to stay in class until they finish the nine years of basic education. Child mortality has significantly reduced.
The Rwandan population enjoys universal health insurance coverage, guaranteeing access to basic health services.
There is no question that aid to Rwanda reaches those who need it most. It has the desired impact and delivers best value for money. The country has a strong accountable public finance management system, a zero tolerance policy to corruption and robust engagement with donors.
So every pound of aid is accounted for and can be tracked to tangible and verifiable results. There is, therefore, no doubt that if the raison d'être for aid is to reduce poverty and benefit the vulnerable, Rwanda is a star performer.
For donors to suspend aid to the country based on allegations in a highly contested United Nations "Group of Experts" report to the UN Sanctions Committee on DRC raises serious questions about the intentions of donors when they give aid. This has far reaching implications beyond Rwanda.
The crisis in the Democratic Republic of Congo has been around for decades. It didn't start with the M23which Rwanda has expressly and strongly denied it doesn't support. DRC has experienced over four decades of governance failure, institutional decay, corruption, insecurity and conflict.

The current crisis is a direct result of the country's political and historical complexity. This is external to Rwanda which has its own internal priorities of reconstruction after a tragic genocide in 1994.
The carnage, death, loss of life and humanitarian crisis that has gone on for decades in DRC is painful and inexcusable. It must stop. This can be achieved by genuinely addressing the root causes of the cycle of conflict and finding a lasting solution. Any sustainable solution will have to be DRC led. This requires ownership by the Congolese to genuinely seek a political dispensation that will bring durable peace and stability.
Rwanda as a neighbour can only help where it is needed. Indeed Rwanda has been pro-actively engaged with the DRC government and within the framework of the International Conference for Great Lakes led regional initiative to find a lasting solution to the crisis.
The suspension of budget support, despite Rwanda's efforts and demonstrated good will to help ensure stability prevails in the region, while rebuilding after being a failed state in 1994 is a slap in the face. This action harms Rwanda, but will not help DRC either.
Rwanda has built a successful partnership with its development partners. The country has played a key role as an inspiration in the conception and implementation of the Paris declaration on aid effectiveness.
The declaration was influential in re-shaping the relationship between donors and aid recipients. It sought to re-define the relationship as one of development partnership rather than paternalism. Principles of encouraging countries to own their development process and donors to ensure the quality of aid is improved, predictable and aligned to country owned priorities are at the core of the Paris declaration signed by donor countries and aid recipients.
The framework for mutual accountability has been championed by the OECD-DAC and Rwanda has been hailed as meeting its part of the bargain.

Rwanda has been instrumental in ensuring that this new aid architecture is feasible and works. In December 2011, the country represented Africa and brought the continent's voice at the Fourth High Level Forum on Aid Effectiveness in Busan, South Korea. President Paul Kagame spoke eloquently in Busan about the strength of this new era of development partnership and the promise it held.

Less than a year after Busan and donors re-affirming their commitment to ensure aid works for the poor, Rwanda, the star performer, is a victim of the violation of the same commitments that donors first agreed on in 2005 in Paris and re-affirmed in the Accra Agenda for action in 2008.
The decision on Rwanda affirms that aid remains very highly politicized. It demonstrates that donors, at the expense of the poor and vulnerable, will use aid to push for political objectives or to reward compliance and punish non-compliance depending on "development partner" interests.
Budget support to Rwanda was frozen not because the country has failed to use it for the benefit of those who need it most, but to influence a political end in the DRC. There is no direct link between what is happening in the DRC and what aid achieves for ordinary Rwandan citizens. This is definitely not the right way to solve DRC's problems. Rwanda should not be penalized for the failures of another country.
Critics of general budget support present it as if donors give the aid to Rwanda as a blank check that government can spend as it wishes. That is not true. The Government of Rwanda in its annual budget preparation works with its development partners to agree on allocations to agreed priority programs and results are pegged on a well defined verifiable results framework. So donors know ahead of time where their money is going and what it will achieve.
While the case of bilateral donors withholding aid due to political consideration may be understood, the worst precedent that has been set is the politicization of the multilateral development agencies - The World Bank and African Development Bank. This is unprecedented and has far reaching implication beyond Rwanda.
The World Bank and the AfDB are development Banks. Politics should be kept out of their business and operations. Rwanda has not violated any agreement with the institutions. Donors must keep politics out of these reputable global organizations whose sole mandate is development and not politicking.
This may be about Rwanda today, but the implications for the functioning, governance, and reputation of these banks and the countries they serve is far reaching and exposes them to risk. This must stop. Rwanda has not violated any terms of the World Bank or the Africa Development Bank and interests in DRC that have nothing to do with Rwanda should not be brought into their governance and decision-making process.
There is no reason for the rich countries of Europe to politicize these institutions. This is a very dangerous path and should not be ignored or seen as limited to Rwanda.
One important point to underscore is that these political decisions directly affect the poor. They compromise the quality of aid which has an adverse effect on the quality of development outcomes and results.
But fundamentally the belief that aid is primarily aimed at reducing poverty and improving the welfare of the poor is greatly undermined. Even ordinary citizens begin to perceive aid as a tool only intended for political control and to buy political leverage and influence.
The Rwanda case should therefore not be seen in isolation. It should awaken developing countries to the reality that aid is very volatile. It is intensely more political than we have previously believed. We can no longer claim that aid is fundamentally for poverty reduction and development when at the flimsiest excuse, lives of the poor can be put on line due to political considerations.
Developing countries also need to reflect on the nature of the relationship between donors and aid recipients. Is it truly a development partnership or paternalism? Until recently, Rwanda had believed that the relationship had moved closer to a partnership.

Reality has now dawned that aid remains very unpredictable and the donor-aid recipient relationship might be slipping back into the 1960s approach where political, military and economic interests were the major determinants of the nature of aid countries received.
Donor commitments are increasingly becoming a talk-show and mature democracies of the world can renege on their own commitments and fail to honour agreements on aid disbursements without accountability.
I would be curious to know what we would be saying if the Busan High Level Forum on aid effectiveness was happening tomorrow and the evaluation of progress on the forgotten Paris declaration on aid effectiveness was happening today. 

We certainly have another aid effectiveness show coming in the near future and the same commitments will be rehearsed.

Wednesday, December 19, 2012

Intra-Africa trade: A Must for African Development


In my 26 years on Earth, I have made a few journeys across African borders. I am not a cross-country merchant, nor a Sahara Tuareg; most times my quest was to attend conferences and seminars to facilitate growth ideas among like minds across borders, and these trips have given me the opportunity to see and experience the state of several border posts in Africa.

It is pertinent to note that, since independence, Sub-Saharan African (SSA) governments have concluded a large number of regional integration arrangements (RIAs). Yet, intra-regional trade remains comparatively low.

It is also appalling to state that most regional African borders are rustic and do not facilitate trade among neighbouring countries. The immigration office at every border is like a cartel, bringing shame to the RIAs and in effect negating the African Union charter. At every check point, money is expected to be paid – bribery is an open transaction – or a person or goods will not be allowed pass through.

For instance, trucks driving between Busia Uganda-Kenya border points will experience, over 10 checkpoints, and drivers often have to spend days, even weeks, waiting for uniform and non-uniform customs, immigration, quarantine, anti-drug, and other state agents' clearance. Compare to the European Union which has ended that sort of strenuous border-crossing harassment. Today, travelling among EU countries is much like driving between cities within a country.

This continuous high barrier among SSA countries coupled with incessant corruption contributed to the recent poor rating of Sub–Saharan Africa by Transparency International in its 2012 Corruption Perception Index (CPI), in which SSA countries were comfortably sitting at the bottom of the index.

These further depict an empty boast by most SSA leader’s claim that corruption has gone down under their watch.
Amusingly, most African leaders are jesters, they have openly called for further trade liberalization; they urge an end to protectionist policies in the developed world while they refuse to open their own borders even to their immediate neighbors.

Other identifiable problems to greater African trade include export and import bans, variable import tariffs and quotas, restrictive rules of origin, and price controls.
Policies are poorly communicated to traders and officials, while the process in turn promotes confusion at border crossings, limits greater regional trade, creates uncertain market conditions, and contributes to price volatility.

A scholar, Marian L. Tupy stated that Free Trade continues to be misunderstood by African leaders. The most important misunderstanding concerns the positive impact of foreign and regional competition on stimulating domestic production, widening the circle of people's transactions; it brings benefits to consumers in the form of lower prices, greater variety, and better quality, and allows companies to reap the benefits of innovation, specialization, and economies of scale that larger markets afford which in the long-run enhance prosperity, both nationally and personally.

Unfortunately, Import and cross-border trade are often seen as a threat in Africa, which is why SSA leaders emphasize exports and access, in order to develop world markets, as opposed to opening their own countries to foreign goods.

A recent study reveals that average tariffs in Africa are still significantly higher than in the rest of the world. Despite clear economic benefits – a World Bank study estimated that a 20 per cent reduction in border-crossing time alone in Africa would generate 15 per cent savings in transport prices – regional economic communities have not gone as far as expected in easing cross-border business linkages.  Another new World Bank report indicates that the continent will generate an extra $20 billion yearly if its leaders can agree to do away with trade barriers that hinder more regional vitality.

Instead of African leaders to facilitate and implement policies that can solve the stated problems and ease intra-regional trade, they were and are busy seeking and negotiating for foreign aid, yet “it would take no donor money to keep borders open around the clock” says Greg Mills, a Director of the Johannesburg based Brenthurst Foundation.

For Africa to succeed, African governments must put people and sound ideas first rather than narrow-minded political interests at the heart of development. The governments must look beyond their conventional wisdom of emphasizing exports and access to develop world markets as opposed to opening their own borders for free flow of trade.

SSA countries must begin by liberalizing their economies, and open their borders with one another and indeed with the rest of the world. They should not be afraid of unilateral liberalization – China, India, Chile, Hong Kong, even the Africa example, Mauritius, have done so in the past and reaped the benefits. After all, as we all should have learned from history, if people and goods don’t cross borders soldiers will.


Burundi. The Sick Man of East Africa


while ago Western Europe had its sick man, a country called Turkey, that seemingly failed in to jump into the ship of industrialization, age of science and technology and exponential economic development. Turkey failed to seize the moment, its insular nature and the cultural gulf between Turkey and the rest of Western Europe meant that Turkey failed to benefit from the industrial age.
The East Africa Community has its own sick man to contend with, and voila it is Burundi. Burundi has failed to seize the moment in this age where integration within the region provides opportunities for countries within the region to double their growth figures. So what makes Burundi sick?
Burundi was a German colony until 1923 and a Belgian colony thereafter under the Rwanda-Urundi colony in Central Africa and then became independent in 1962. A country of 6 million people and 27,834KMs makes it one of the most densely populated countries in Africa.

Half of its population is under 15 years old & 80% are living below UN poverty levels, Adult literacy levels are under 36%, Over 25% of all primary schools have been destroyed, while international donors cut aid to education by over 70% in the past decade. The country continues to rank second only to Rwanda as a blood-drenched nation, subject to recurring bouts of ethnic genocide.

Though its ethnic dichotomies are less extreme, Burundi is sometimes referred to as Rwanda’s “false twin”. Since October of 1993, Burundi has been embroiled in a deadly civil war characterized by armed political & ethnic confrontations. The cost has been high: approximately 300,000 people have been killed and some 800,000 displaced as refugees.  
Burundi remains queerly disparate in a region that is slowly moving to extricate itself from a decade long under-development impasse. How come Burundi has not taken the mantle from Rwanda, which has shaken off its blood-drenched status to become a paragon of progress in the East African region?
Much of the conflict through Burundi’s history has been ethnic, between the Hutu of the 85% population and the Tutsi 10%.  The ethnic conflict in Burundi, itself an anomaly, for the Hutu and Tutsi are genealogically homogeneous with the Hutu being crop farmers and the Tutsi being the cattle people. The ethnic acrimony in Burundi has its past anchored in the colonial policy of divide and rule which pitted the Tutsi’s the minority who were used as veritable tools of Hutu annexure.  
Moreover Burundi’s landlocked status and a lack in abundance of natural resources makes it of relatively little geo-strategic importance which in part has led to donor and Western apathy or ignorance altogether.
Ethnic analysis though, only tells part of the story, for the Burundi is a country that has simply refused to come of age. Data from The Heritage Foundation Index of Economic Freedom posits that Burundi’s economic freedom score is 48.1, making its economy the 157th freest in the 2011 Index. Its overall score is 1.5 points worse than last year, mainly because of deterioration in the management of public finance.

Burundi is ranked 37th out of 46 countries in the Sub-Saharan Africa region, and its score is worse than the world average.Continuing its status as a “repressed” economy, Burundi performs worse than world averages in many of the 10 economic freedoms. The fragility of the country’s foundations of economic freedom is reflected in very low scores for property rights and corruption that undermine the rule of law.

Moreover Burundi ranks below the world average in critical areas like; Limited Government, Rule of law, regulatory inefficiency and open markets.
Does Burundi have a solution, a magic bullet to sort-off wish the problems of the present and the past away? Although the answer to this question might involve sorting out the insecurity matrix with the Great Lakes region there is something Burundi can do to attract a future not so bleak.
Strengthening her institutions and insulating her people and corporations from arbitrary plunder especially by the military would go a long way in attracting Foreign Direct Investments more-so from the East African region. Reforming her tax regime, and respect for property rights are both critical in unlocking the people’s potential to make wealth.


Monday, December 17, 2012

Capitalism.. the Earth is not a Commodity



Capitalism is designed to promote competition and social inequality (Parjis, 1995) which cannot accommodate a climate change movement meant to benefit the entire earth and its inhabitants with an even distribution. 

As an international leader, the United States government along with its citizens must shift from a mind-set of social and economic capitalism toward a political framework that encourages collective equality. In the U.S., capitalism privileges wealthy, upper-class, white individuals who hold positions of power (Keister and Moller, 2000) over the rest of the country’s diverse constituency. 

This constituency must be invited into the climate change movement, and granted equal access to technology and research geared towards addressing dangerous levels of human-induced climate change.

Capitalism as an economic and social theory, as popularized by the United Sates, will not work as a tool for organizing the climate change movement because the environment is not a commodity, nor is the environment a human construct.

 Karl Marx seemed to foresee the dilemma American proponents of capitalism are facing in his writings about the origins of labor. He explained how labor is essentially human interaction with nature through the exchange and conversion of organic materials (Koch, 2012).

 Through these interactions, humans can explore and even confront natural conditions and processes. Marx also writes that even though humans have socially constructed definitions of money and trade, humans cannot use money or trade to control the earth’s natural and physical processes. 

Money and trade operate under the human understanding of economic patterns. The earth operates under human understanding of scientific patterns. Money and trade were not designed to conform to nature’s laws and standards and vice versa.

An example of environmentally harmful capitalism at work is the formation of our nation’s fossil energy regime. In his book Capitalism and Climate Change, Professor and environmentalist Max Koch (2012) retells the story of how the birth of Fordism sent the country into an era of producing and driving cars that required huge amounts of crude oil – which was abundant early in the 20th century. 

Because crude oil in the United States was so readily available and cars were such a convenience, the U.S. single-handedly drove the world to an unhealthy addiction to cars and fossil fuels. The U.S. introduced the world to cars and sold the fuel to boot. The framework of U.S. capitalism encouraged a pressure on the economy to increase output of such a desirable product to meet the car and fuel demands of the country and of an increasingly capitalist world market. 

Not much thought was given to the consequences of treating a natural resource as a commodity. We now know that the majority of greenhouse gases making the planet dangerously warm come from burning fossil fuels (EPA). It will take a complete reversal of this capitalism-fueled economic addiction to fossil fuels and cars that run on fossil fuels to move toward reverse the harms.

Capitalism not only interrupts natural and physical patterns in nature. It has historically alienated racial minorities as a result of capitalism’s tendency to promote social stratification. History and economics professor Hugh Stretton (1976) argues that a climate change movement will be unsuccessful under a capitalist system because an unequal distribution of wealth and education parallels an unequal distribution of ownership over the direction of the climate change movement. 

Stretton stresses the dangers of alienation when trying to create national or global climate change movements. He advocates an evenly-distributed sense of ownership across a movement in order for it to be successful.

While research at elite institutions and international policy around climate change are impressive and important steps towards slowing harmful climate chance, these actions are not inclusive. 

The environmental movements in Africa must apply pressure to the respective governments to change the rhetoric of our  African Economies and get them away from competition and production and set them towards redistribution of wealth and institutionalized environmental education that can draw clear connections between liberating the earth from capitalism and the liberation of people who are oppressed by capitalism.

Liberating people from a historically cruel and oppressive capitalist system carries a strong parallel to liberating the earth from the same system. The earth has been abused, colonized, enslaved, sold, poisoned, and forced to conform to the human construction of capitalism.

So have people (Love, 2010). Removing or rethinking capitalist economic frameworks will not only allow us to move away from abusing the earth as a commodity, but it will also require individuals to consider the earth as the earth and its citizens as citizens of a collective.

 I would argue that the biggest setback to the climate change movement is an inability for scientists, politicians, citizens, and just about everyone else to communicate and agree on what to do. 

Even if there is overwhelming scientific evidence for climate change and technologies that could ameliorate our dangerous situation, no progress can be made until we, as a country, can fully acknowledge how our economic system – the system on which we are currently surviving – is also killing us and the land we live on.

Capitalism is neither sustainable nor renewable.